The model portfolio assumes $10,000 invested in each stock (unless we double-up–then it is $20,000), less $10 commission each way (TD Ameritrade rate).

For the 68 stocks that we closed out since 2006 (57 were winners) the average net gain was 34%

Synacor Inc. (NASDAQ-SYNC)-Recommended 12/17/2013)

Buy Price $2.56 Valuation $6.39 Closed up $.05 at $2.64 UP 3% BUY

Dex Media Inc. (NASDAQ-DXM)-Recommended 5/10/2013)

Buy Price $15.14 Valuation $31.50 ( Was $24.25) Closed down $.35 at $6.16 Earnings announced on November 5, 2013. Oiy. Just trying to figure out how they did with all the purchase accounting and pro-forma adjustments is a nightmare. Revenues were $567 million on a pro-forma basis and EBITDA was $220 million. Using our 3.5X EBITDA less net debt gives us a valuation of $31.50. As far as we can see they are still on track with their 12/6/2012 pre-merger projections, other than digital sales did not grow as predicted. They forecast $2.33 billion in revenue, $2.681 billion in net debt and $865 million of adjusted EBITDA for 2013. For the 9 months ended September they did $1.686 billion in revenue, net debt was $2.617 and they reported $674 million in adjusted EBITDA. If they repeat the current quarter they will miss revenues by $100 million but still meet their EBITDA and net debt goals.. Obviously no one else sees it this way as the stock cratered. We will continue to hold as we have seen other value plays like Pitney Bowes ($11 to $24) and Lexmark ($21 to $35) come back from panic situations. We will not double up here as there really is a lot of debt and this will need a couple of more quarters of performance before it is proven they can handle the debt and survive for the long term. Paulson & Co, filed a Form 13D on 5/10/2013 disclosing a 10.9% stake. They have held this stake since before the bankruptcy and merger. Then on May 14th, they filed a 13D/A disclosing another 350,000 share buy at prices up to $17.07 bringing their stake to 13%. Down 59% HOLD

XRS Inc. (NASDAQ-XRSC)-Recommended 2/26/2013)

Buy Price $1.50 Valuation $6.71 ( Was $6.16, $6.79, $6.50) Closed up $.02 at $2.73 Earnings announced on November 7, 2013. About the same. Revenue was $14.1 million compared to $15 million last year and they made a profit of $82,000 versus a loss of $221,000 last year. From their press release: “Fiscal 2014 will be a year of significant transition for the Company as we begin the migration of our legacy customers to the XRS mobile solution. As we transition from our legacy hardware-based solutions to our no upfront cost mobile solutions, we expect soft overall revenue. We expect accelerating mobile revenue growth with consistent margins and will continue to invest in the further development of the XRS mobile solution with key integrations to strategic third-party providers thereby creating a whole product that will position us to capitalize on this expanding market.” Our valuation increased to $6.71 per share. UP 82%, HOLDDaegis Inc. (NASDAQ-DAEG)-Recommended 11/30/2012) Buy Price $1.09 (Was $1.20 before we doubled up) Valuation $3.19 (Was $3.42, $4.64, $4.86, $4.00) Closed down $.05 at $1.17 It looks like someone is buying any big chucks as they become available. DAEG hit $1.35 on Wednesday on an 11,000 share trade. Earnings were reported on 12/3/2013. On the surface not so good. Sales fell to $7.7 million from $10.3 million and adjusted EBITDA fell to $755,000 from $2.1 million last year. Net debt increased a bit to $11.6 million from $11 million last quarter, but is down about $3 million from last year. We read the earnings transcript and actually thought this looks like a good bet. That and the Pessin filing, and the 1.2 million shares that traded on Friday. Maybe Jensen sold? Our valuation continued down to $3.19 per share-still a lot higher than the current trading price. We will probably buy more of this personally next week. Norm Pessin filed a 13D on November 27, 2013 disclosing a 6.2% stake. Good news that someone else sees the value here. Kurt Jensen a 10% owner continues to sell stock at almost any price, putting a lid on DAEG. He still has 1.6 million shares, so this could take a while. Looks like BlueLine Partners (a “strategic opportunities fund”) have shaken up Daegis management in January with the ouster or the CEO and CFO. The interim CEO and Chairman of the Board is a BlueLine founder. Its feeling like they are not happy with the current stock price for sure. Up 18%, BUY

Bridgeline Digital Inc. (NASDAQ-BLIN)-Recommended 8/24/2012)

Buy Price $1.24 Valuation $1.83 (Was $1.61, $2.19, $2.35, $2.56, $2.24) Closed up $.08 at $1.15 Earnings announced on December 10, 2013. Revenues were $6.7 million the same as last year. First quarter in a while that revenues didn’t decline due to the run-off of their legacy products. Core products revenue was up 30%, while legacy business was down 61% to $1.4 million. They reported a $705,000 loss for the quarter. For FY 2014 they are projecting revenue of $28 million and positive adjusted EBITDA (compared to a loss of $700,000 this year). Our valuation rose to $1.83 a share. BLIN raised $2 million in October 2013 by selling 10% secured convertible notes. The conversion price is $1.30. Let’s hope they convert soon. We are changing this to a Buy as we expect to start seeing some positive revenue comparisons in 2014. Down 7%, BUY

Telecommunications Systems Inc. (NASDAQ-TSYS)-Recommended 6/14/2012)

Buy Price- $1.37 Valuation $6.81 (Was $6.28, $4.89, $6.02, $6.72, $5.49) Closed down $.053at $2.34 Earnings announced on October 30th. Not bad. Revenue rose from $93 million to $96 million and they reported breakeven net income versus $.07 last year and “adjusted net income of $.05 per share versus $.12 last year. Gross margin was 37.3% versus 31.5% last year. Our valuation rose to $6.81 a share. Net debt declined to about $92 million, down $3 million from last quarter and down $19 million from a year ago. Carlo Cannell, an activist investor filled a 13D in September 2012 pointing out how undervalued TSYS is and urged them to put themselves on the block. He points to a valuation done on the company as of August 29th 2012 of $7.40 to $11.81 a share. Even the low point here is higher than our valuation. UP 71%, HOLD

Aviat Networks Inc. (NASDAQ-AVNW)-Recommended 2/27/2012)

Buy Price- $2.62 Valuation $3.79 (Was $8.60, $9.31, $10.28. $9.03, $9.37, $8.85, $8.31) Closed down $.06 at $2.25 Privet Fund filed a 13D on November 26, 2013 disclosing a 5% stake. They bought at prices ranging from $1.99 to $2.20. In the 13D they gave the reason for their purchase as “The Reporting Persons purchased shares of Common Stock because they believed that the shares may present significant opportunities for realization of increased stockholder value.” Let’s hope they are right. AVNW announced earnings on October 30th. Ugly.They did not even make the low end of the revenue guidance they announced a couple of weeks ago. Revenues came in at $93.4 million down from $115 million a year ago and they lost $7.8 million on a Non-GAAP basis versus a $2.8 million profit last year. Gross margin plunged to 25% and net cash fell to $1.20 a share. Our valuation also plunged to $3.79 a share as all the key metrics dropped. Their book-to-bill ratio was a bit over 1 this past quarter leading them to give next quarter guidance of $100 to $107 million in revenues and Non-GAAP income of $.03 to $.08 per share. Not good. This is definitely not a BUY anymore. Penn Capital Mgmt. filed a 13G in late February 2013 disclosing a 6.05% stake. Dimension Fund filed a Form 13G in February 2013 disclosing a 5.3% stake, Vanguard disclosed a 5.67% stake and Blue Mountain has been buying more and is now up to a 5.90% stake. Down 14%, HOLD

CBeyond Inc. (NASDAQ-CBEY)-Recommended 2/28/2012)

Buy Price $7.17 ( Was $7.94 before another $10,000 added at $6.53) Valuation $26.12 (Was $27.58, $28.24, $28.33, $29.04, $29.59, $29.58, $29.21) Closed down $.02 at $6.95 Earnings announced on November 6th. Not great. Sales fell to $113.7 from $121.5 last year, and they lost $3.3 million (excluding a $2 million write-off. Our valuation fell a bit to $26.12. The big news to us was that they announced they are looking at “strategic alternatives” which includes the sale of the company. This could result in a number of things happening, including nothing, but it is a good sign that they understand that they get no respect in the market. They said they would slightly miss their full year 2013 sales guidance from $464-$471 million and come in at the middle of their previous EBITDA guidance of $76-$80 million. Penn Capital Mgmt. filed a 13G in late February 2013 disclosing a 5.55% stake. $78 million of EBITDA, $.25 a share in net cash and a $185 market cap. Cheap. Down 3%, BUY

MRV Communications (Pink Sheets-MRVC.pk)

Valuation $28.98 (Was $24.01 $23.06, $27.15, $31.80, $34.60, $28.60, $41.20, $43.20 (after $9.50, $6.00 and $1.40 special dividends), $52.40, $55.80) Buy Price October 7, 2011- $8.50 ($25.40 before special dividends) Closed at $11.40 down $.06 Earnings announced on 11/12/2013. Revenues were up 11% to $38.4 million and their loss declined to $146,000 from $1,320,000 last year. Net cash per share was $3.54 and our valuation jumped to $28.98 a share. They say they are continuing to invest in the business and that these should become apparent in 2014. Patience. Lloyd Miller disclosed a 6.9% stake in February 2012. Raging Capital bought another 1.6 million shares in the first week of December 2012 at $10.80 bringing their holdings to 20.1% of the company. Still trading at less than ½ our valuation. UP 33% BUY

Sigma Designs Inc. (NASDAQ-SIGM)-Recommended 7/11/2011)

Buy Price-$8.49 Valuation $12.30 (Was $11.86, $8.24, $13.05, $10.67, $8.41 $12.10, $13.40, $16.02) Closed up $.50 at $5.10 The CEO bought 343,000 shares back from Potomac Capital in December 2013 leaving Potomac with only 465,000 shares of SIGM. The interesting part was that the CEO paid $5.50 a share or about $1 over its trading price. Either a great expression of confidence in SIGM or a small price to pay to get rid of an activist investor. Since we don’t know which it is, or both we will stay a hold on this, even though our gut says to buy. Earnings announced on December 11th. They continue to do what they say they are going to do. Revenues were $54.4 million, net cash was $88.1 million or $2.55 per share and our valuation rose a bit to $12.39. They reported Non-GAAP income of $3.3 million or $.10 a share. But, they surprised Wall Street with Q4 guidance of revenues of $40-44 million and essentially breakeven results. They also announced a $20 million share repurchased program—which didn’t impress anyone. With the stock off 16% last week and near its 5 years lows now would be time to buy some I guess. This will only help if they cn be profitable going forward. Our valuation will fall to about $11 based on their guidance, which compared to $8.24 in their year ago fourth quarter. At this price and valuation we are still at a hold on SIGM. Down 40%, HOLD

Concurrent Computer (NASDAQ-CCUR)-Recommended 2/4/2011)

Buy Price-$4.58 (Was $5.08 before $.50 special dividend) Valuation $14.55 (was $14.77, $16.26, $16.20, $15.37, $13.53, $15.85, $14.13, $11.38, $14.04, $18.54, $15.99) Closed down $.12 at $8.42 (including dividends) Pays $.48 annual dividend. Earnings announced on October 29th. Nice. Revenue was up 14% to $17.2 million and they made $.08 a share. Cash per share was a healthy $2.82. Gross margins fell a bit so our valuation of $14.55 was down $.22 from last quarter, but up $1.02 from last year. We have collected $.48 in dividends so far (excluding the $.50 special dividend which reduced our basis). UP 84%, HOLD

Gravity Company Ltd. (GRVY-Recommended 1/18/2010)

Buy Price- $1.45 per ADS (Was $1.68 before double up) Valuation $3.18-(Was $3.06, $3.02, $4.14, $3.65, $3.41, $5.52, $5.00, $5.39, $5.33, $5.61, $5.73, $4.38, $4.44, $5.15) Closed at $.97 down $.01. Earnings announced on November 29th for the quarter ended September 30, 2013.Revenues were $12.1 million versus $14 million last year and $11.4 million last quarter and they lost $1.7 million. Net cash rose to $46.7 from $45.2 million or $1.69 per share. Our valuation rose a tad to $3.18 per share. Lots of product introduction updates in their press release, but not much has been translating to the financials. Looks like they lost their licensee in China and are looking for a new one and they canceled the Korean version of Ragnarok 2, although the English version is still available. Revenues were up a bit as was cash, but unless the company decides to distribute some of that excess cash (like $1.00 a share) this is going to be a long wait. It would be a shame to have to sell this below their cash value, but this may make a good tax loss candidate for 2013. Down 33%, BUY

ARI Networks (ARIS.ob-Recommended 8/19/2006)

Buy price $1.61 (Was $1.78 before another $10,000 added, was $2.06 before double up), Valuation $6.71 (was $6.41, $6.14, $5.97, $6.21, $6.13, $5.82, $5.81, $5.72, $5.65, $5.39, $4.86, $5.60, $5.73, $5.54, $5.74, $5.96, $4.72, $5.19, $5.66, $5.63, $5.61, $5.71, $5.49, $5.34, $5.03, $5.28, $5.28, $5.21) Closed at $3.25, unchanged Q1 earnings announced 12/16/2013. Revenues were up 37% to $8.16 million from $5.942 million last year, gross margin was 81% and they made $25,000 compared to $113,000 last year. Recurring revenues were 95% of total revenues. They say in the press release that they are investing more in sales and marketing this year, but still expect to achieve higher EBITDA than last year. Our valuation fell however to $5.70 a share mostly due to 13.8 versus 8.2 million shares outstanding. Still trading at only 59% of our valuation. ARI announced another acquisition in November 2013. No details, but a good sign that they are really trying to accelerate their growth. Wynnefield partners bought another 100,000 shares at $2.90 in the first week of July 2013 raising their stake to over 10%. If ARI can grow continue to grow their revenue and profits over the next couple of quarters, we think the stock price could approach our valuation. UP 102%, HOLD, Still a Huge valuation gap here.

CTI Holdings (CTIG.ob-Recommended 2/25/2006)

Buy price $.27 ask, Valuation $1.02 (Was $1.05, $1.07, $1.14, $1.17, $1.34, $1.34, $1.37, $1.36, $1.23,$.91, $1.21, $.71, $.83, $.88 $.96, $.93, $.75, $.85, $1.57, $1.40, $1.29, $1.38, $1.31, $1.38, $1.29, $1.42, $1.28 $1.13, $1.05, $.82) Ask price $.36 closed at $.35 Some news—finally. Fairford/Birbeck upped their non-binding offer to $.40 a share. No indication as to whether the Board will accept it or any other details. Still a lowball offer but one which we would take after holding this for almost 8 years. SELL. 10Q filed on 11/14/2013. Not even a press release. Still trying to steal this under the cover of darkness. Revenues were $3.6 million, down from $3.9 million last year. They lost $394,000 compared to net income of $34,000 last year. Our valuation fell to $1.02 a share still more than triple the management buyout price. Cash per share fell to a measly $.02. Not a peep on the management buyout, although the 10Q still says they have special committee looking at it. CTIG announced in June 2013 that they had hired Duff and Phelps as their independent financial advisor. Guess the Board decided they need to get a fairness opinion to keep down the damages on the lawsuit. Birbeck and Fairford Holdings made a non-binding offer to buy CTIG in March 2013 for $.29 a share. The company formed a special committee to evaluate the offer. Hopefully they will find somebody else who will pay fair value—or at least close to it. UP 33%